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Blend Labs, Inc. (BLND)·Q2 2025 Earnings Summary

Executive Summary

  • Fourth consecutive quarter of YoY revenue growth and non-GAAP operating profitability; Q2 revenue was $31.5M (+10% YoY) with non-GAAP operating margin of 15% as platform focus and cost discipline continued to show through .
  • Record RPO of $190.4M (+$32.3M QoQ), underpinned by 23 new/expanded deals (including three IMBs) and a May $50M renewal/expansion; management emphasized accelerating sales momentum and multi-product platform wins .
  • Against S&P Global consensus, Q2 revenue modestly missed ($31.52M vs $31.93M*) and non-GAAP diluted EPS was $0.00 vs $0.02*; EV/funded loan (EVPL) fell to $88 as expected and will face near-term headwinds to ~$85–86 in Q3 on onboarding a large strategic IMB deal, with exit-2025 in the mid-to-upper $80s * * .
  • Q3 outlook: revenue $31.5–$33.5M and non-GAAP operating income $3.0–$4.5M, with HMDA market units of 1.16–1.26M (seasonal downtick expected in Q4); “Simplify Blend” steps advanced (Title365 sale agreement) and partnerships (Doma Upfront Title, PHH Rapid suite) deepen higher-margin platform model—key stock catalysts alongside record RPO and Rapid adoption .

What Went Well and What Went Wrong

  • What Went Well

    • Record RPO ($190.4M) driven by a healthy mix of new logos and expansions; CEO: “sales momentum accelerated in the second quarter, with 23 new or expanded deals…reinforcing Blend’s position as a long-term, multi-product platform partner” .
    • Consumer Banking Suite revenue +43% YoY to $11.4M, expanding mix to 36% of software revenue; management sees strong pipeline and strategic diversification benefits .
    • Non-GAAP operating margin of 15% (vs -19% a year ago) and non-GAAP gross margin 76% (vs 71% LY), reflecting platform focus and cost actions .

  • What Went Wrong

    • Small miss vs S&P consensus: revenue $31.52M vs $31.93M* and non-GAAP diluted EPS $0.00 vs $0.02*; GAAP diluted EPS was a $(0.03) loss *.
    • EVPL fell to $88 as expected and will be pressured near term (~$85–86 in Q3) due to a large strategic IMB deal with lower upfront pricing, before trending higher with Close and Rapid Refi attach over time .
    • Cash used in operations of $(5.3)M and free cash flow of $(9.0)M in Q2 (vs positive in Q1) as working capital and capex stepped up; cash and marketable securities ended at $93.3M, no debt .

Financial Results

Headline vs. consensus and trend

MetricQ4 2024Q1 2025Q2 2025 ActualS&P Global ConsensusResult
Revenue ($M)$30.12 $26.77 $31.52 $31.93*Miss
Non-GAAP Diluted EPS$0.00 $(0.01) $0.00 $0.02*Miss

Estimates values (*) retrieved from S&P Global.

Income statement trajectory

MetricQ4 2024Q1 2025Q2 2025
Total (Platform) Revenue ($M)$30.12 $26.77 $31.52
GAAP Diluted EPS$(0.03) $(0.04) $(0.03)
Non-GAAP Diluted EPS$0.00 $(0.01) $0.00

Margins

MarginQ4 2024Q1 2025Q2 2025
GAAP Gross Margin %74% (Platform) 71% 74%
Non-GAAP Gross Margin %75% (Platform) 73% 76%
GAAP Operating Margin %(4)% (29)% (15)%
Non-GAAP Operating Margin %13% 4% 15%

Segment revenue mix

Revenue ($M)Q4 2024Q1 2025Q2 2025
Mortgage Suite$18.18 $14.64 $17.96
Consumer Banking Suite$9.46 $9.62 $11.43
Total Software Platform$27.64 $24.26 $29.39
Professional Services$2.49 $2.51 $2.13
Total Revenue$30.12 $26.77 $31.52

KPIs and liquidity

KPIQ4 2024Q1 2025Q2 2025
EVPL – Mortgage ($ per funded loan)$96 $93 $88
RPO ($M)$123.0 $158.1 $190.4
Cash + Mkt Sec + Restricted ($M)$105.8 $109.8 $93.3
Free Cash Flow ($M)$(7.2) $15.5 $(9.0)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)Q3 2025—$31.5 – $33.5 New
Non-GAAP Operating Income ($M)Q3 2025—$3.0 – $4.5 New
HMDA Market Units (M)Q3 2025—1.16 – 1.26 New
HMDA Market Units (M)Q4 2025—1.13 – 1.23 (seasonal downtick) New
Non-GAAP Operating Expenses ($M)FY 2025$85 – $90 Maintained; could come in below range Bias lower
EVPL ($)Q2 2025~$88 (trough) Actual $88 In line
EVPL ($)Q3 2025—~$85–86; exit-2025 mid–upper $80s New near-term headwind

Earnings Call Themes & Trends

TopicPrior Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
AI/AutomationAnnounced DocAI; belief AI can automate up to 90% of bank servicing tasks; hired Head of AI Piloting AI tool to flag doc/data discrepancies like “smartest underwriter,” aiming for $100s per-loan value uplift Building from vision to pilots
Rapid Refi / Rapid Home EquityGeneral availability, early 1.5x pull-through and faster close; 3 Refi / 1 HE customers live Signed 4 Rapid Refi customers 1H25; expected EVPL tailwind medium-term Adoption expanding
Partnerships / EcosystemTruework VOI, Covered insurance; Upfront Title concept Doma “Upfront Title” expansion; PHH adds Rapid suite; Title365 sale agreement with Covius Platform-first model deepens
IMB StrategyLaunched IMB business unit; features for branch-level needs 3 new IMB logos; large IMB strategic deal creates near-term EVPL headwind Share gains, pricing trade-off
Macro/HMDAQ1 800–900k; cautious on agency forecasts Q3 1.16–1.26M; slight seasonal downtick in Q4 Slightly improving QoQ

Management Commentary

  • “Fourth consecutive quarter of year-over-year total revenue growth and…non-GAAP operating profitability…sales momentum accelerated…23 new or expanded deals…reinforcing Blend’s position as a long-term, multi-product platform partner.” — Nima Ghamsari, CEO .
  • “EVPL was $88…near trough levels…we expect Q3 EVPL to be approximately 85 to 86…[but] longer term, we still expect uplift from value add products.” — Amir Jafari, Head of Finance & Administration .
  • “Upfront Title…integrates…title…directly into the Blend platform…strong adoption with two major lenders…a top five bank and a top five servicer.” — Nima Ghamsari (re: Doma partnership) .
  • “PHH…expanded…to include Rapid Refi and Rapid Home Equity” to deliver faster, more personalized lending experiences. — Company release .
  • CFO transition: “Jason Ream…will join as…Head of Finance and Administration…[bringing] experience leading and scaling great software companies” as Amir transitions .

Q&A Highlights

  • EVPL headwind mechanics: Large IMB strategic deal with lower upfront pricing will depress EVPL near term; medium-term recovery expected via Blend Close and Rapid Refi attach as implementations ramp .
  • AI posture: Vertical software advantage for fast, ROI-driven outcomes; piloting underwriting-assist AI; also using AI internally for efficiency; investment rising but getting more efficient as models advance .
  • Consumer Banking & HE strength: 43% YoY growth in Q2; seasonal uptick plus Rapid Home Equity attach; non-HE consumer (deposits, cards, auto) also executing well .
  • IMB competitive takeaways: Dedicated IMB unit, continued innovation and resilience cited as win drivers; many wins are competitive conversions .
  • Rule of 40: No change to target yet; management will update next quarter; OpEx may come in below the $85–$90M range given macro pressure .

Estimates Context

  • Revenue: $31.52M actual vs $31.93M consensus*; modest miss (driven by EVPL step-down on platform simplification and the strategic IMB deal) * .
  • EPS (non-GAAP diluted, continuing ops): $0.00 actual vs $0.02 consensus*; miss as mix and EVPL weighed; cost discipline preserved double-digit non-GAAP operating margin * .
  • Estimate depth: 7 revenue estimates; 5 EPS estimates for Q2*.

Estimates values (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Record RPO and strong deal momentum (23 in Q2) underscore durable demand and position Blend for operating leverage as implementations ramp; a supportive backdrop for multiple expansion on sustained growth .
  • Near-term EVPL pressure (Q3 ~$85–86) is a strategic trade-off for a large IMB win; attach of Close and Rapid products is the path to EVPL re-acceleration into 2026 .
  • Consumer Banking Suite (up 43% YoY) diversifies cyclicality and enhances mix; continued outperformance vs prior CAGR targets suggests an upward bias to medium-term growth .
  • Q3 guide (rev $31.5–$33.5M; non-GAAP OI $3.0–$4.5M) is steady amid mortgage volatility; HMDA volumes slightly improving QoQ with seasonality into Q4 .
  • Platform-first strategy (Title365 divestiture, Doma Upfront Title, Truework) supports structurally higher margins and lower working capital intensity over time .
  • Watch catalysts: Rapid adoption (Refi/HE), larger-bank deployments, incremental partner integrations, and updated FY OpEx trajectory (potentially below the $85–$90M range) .
  • Trading implication: Modest Q2 miss offset by record backlog and margin execution; narrative hinges on execution in Rapid attach and EVPL stabilization while preserving double-digit non-GAAP margins .